MACROECONOMICS (LL)
21st Edition
ISBN: 9781260186949
Author: McConnell
Publisher: MCG
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Question
Chapter 20, Problem 5DQ
To determine
The export supply curve, the import demand curve and their impact to determine the equilibrium world price .
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In Country A, the production of 1 bicycle requires using resources that could otherwise be used to produce 11 lamps. In Country B, the production of 1 bicycle requires using resources that could otherwise be used to produce 15 lamps. Which country has a comparative advantage in making bicycles? LO26.2 a. Country A. b. Country B
Assume that the comparative-cost ratios of two products— baby formula and tuna fish—are as follows in the nations of Canswicki and Tunata: Canswicki: 1 can baby formula ≡ 2 cans tuna fish Tunata: 1 can baby formula ≡ 4 cans tuna fishIn what product should each nation specialize? Which of the following terms of trade would be acceptable to both nations: (a) 1 can baby formula ≡ 2 1 2 cans tuna fish; (b) 1 can baby formula ≡ 1 can tuna fish; (c) 1 can baby formula ≡ 5 cans tuna fish?
Assume that the comparative-cost ratios of two products—baby formula and tuna fish—are as follows in the nations of Canswicki and Tunata:
Canswicki: 1 can baby formula ≡ 5 cans tuna fish
Tunata: 1 can baby formula ≡ 7 cans tuna fish
a. In what product should each nation specialize?
Canswicki should produce _____- , and Tunata should produce _____
b. Would the following terms of trade be acceptable to both nations?
i. 1 can baby formula ≡ 4 cans tuna fish: yes or no
ii. 1 can baby formula ≡ 8 cans tuna fish: yes or no
iii. 1 can baby formula ≡ 5.5 cans tuna fish: yes or no
Chapter 20 Solutions
MACROECONOMICS (LL)
Ch. 20.2 - Prob. 1QQCh. 20.2 - Prob. 2QQCh. 20.2 - Prob. 3QQCh. 20.2 - Prob. 4QQCh. 20 - Prob. 1DQCh. 20 - Prob. 2DQCh. 20 - Prob. 3DQCh. 20 - Prob. 4DQCh. 20 - Prob. 5DQCh. 20 - Prob. 6DQ
Ch. 20 - Prob. 7DQCh. 20 - Prob. 8DQCh. 20 - Prob. 9DQCh. 20 - Prob. 10DQCh. 20 - Prob. 11DQCh. 20 - Prob. 12DQCh. 20 - Prob. 13DQCh. 20 - Prob. 14DQCh. 20 - Prob. 1RQCh. 20 - Prob. 2RQCh. 20 - Prob. 3RQCh. 20 - Prob. 4RQCh. 20 - Prob. 5RQCh. 20 - Prob. 6RQCh. 20 - Prob. 7RQCh. 20 - Prob. 8RQCh. 20 - Prob. 9RQCh. 20 - Prob. 10RQCh. 20 - Prob. 11RQCh. 20 - Prob. 12RQCh. 20 - Prob. 13RQCh. 20 - Prob. 1PCh. 20 - Prob. 2PCh. 20 - Prob. 3PCh. 20 - Prob. 4P
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- Suppose that the United States limits the amount of steel that can be imported from other countries. Using a PPF that puts units of steel on the horizontal axis and units of another good, such as food, on the vertical axis, explain how such a steel import quota will affect production of food and steel in the United States and alter our consumption possibilities. Will the quota make the United States better off as a whole? If not, will it make anyone in the United States better off? Explain. For 19.21, think of the PPF as that of steel produced in the United States and food produced in the United States (and not as total steel available for use in the United States)arrow_forwardHours of Labor Required to produce Cheese and Wine USA FRANCE Cheese 20 30 Wine 8 20 Show the pattern of specialization, and hence trade is beneficial to each country. If the US is endowed with 1600 units hours of labor and France 3000 labor hours, how many cheese and wine will they produce after trade begins and why? Draw the PFF for both countries and show the post-trade production points. Explain. Is it possible that the world equilibrium price to be Pc/Pw = ¾ ?Explain. Which country will gain more from this trade if Pc/Pw = 2 and why ? Explain Wage rate in France is $4 per unit hours of labor.( when calculated in dollars) What should the wage rate interval in the US be if trade is flowing between the two countries based on comparative advantage? İf the wage rate in USA is 12$ what will happen to trade pattern of the countries?arrow_forwardAssume the United States is a large consumer of steel, able to influence the world price. Its demand and supply schedules are respectively denoted by Dus and Sus in Figure 42. The overall (United States plus world) supply schedule of steel is denoted by Sus.. Figure 4.2. Import Tariff Levied by a Large Country 8 550 475 450 325 0 5 10 O $450, 5 tons, 60 tons, 55 tons O $475, 10 tons, 50 tons, 40 tons O $525, 5 tons, 60 tons, 55 tons 20 O $630, 30 tons, 30 tons, 0 tons 30 40 Consider Figure 4.2. With free trade, the United States achieves market equilibrium at a price of Sus 50 55 Sus W.1 Sus+ w Dus Tons of Steel At this price, of steel are produced by U.S. firms, are bought by U.S. buyers, and are imported.arrow_forward
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